atoon thare e prophetsofoom coe? this has been america's century. giant steps of economic growth ha taken us from the auto age our real gross national product has increased tenfold. our real income per person has tripled. can we keep up the pace? wi the help of ast richard gill we'll examine at questio
othe improvement in our staard ofiving can beie our economic growth since 1900. average woers enjoy three times as many goods. alofs because of a continuing increase in productivity, the engine of growth a productivity revolutionto. how did it begin? why was it successfu turn of the century autos were playthings of the rich. eir puose was not wholly clear.utos
peaps they were stin stac pose. certainly, auto industry growth was static. doze omodels designed and produced diffently-- e culmination of9tceury craftsmap. with buyers like astors, vanderbilts, e culmination of9tcwhitneys, and wintops setting the fashion, $5,000 a car-- $50,000 in today's dollars-- seemed nothing extraordinary. in aichigan machine shop,there . could you get a ca for under $1,000? in905, most of these cars were around $2,000. henry forda junior partner, proposed less expensive model n. his senior partners argued for the more expensive model k. alexander malcolmson and friends lost when ford bought them out with borrowed money. thereafter, the ford would bese, with henryord inontrol.
first,e signed e right car, todel t. ma for farmers, ey'durchhrough mud, ford streams, plow through the snow. there were still only 200,000 cars in a country of 89 million people. if ford could get the price down to $600, he could tap that vast market. but how? how to improve productivi? au industry historian labor turnover approached 370%. he could tap that vast market. the quit rate was 370% of the workorce. maintain a wo forcef 1, the quit rate was 370% of the workorce. ado hire 5400 workers year.
nearly doubling the unskilled workers' wages to provide the financial incentive for the worker to produce at a much faster rate and a much faster pace. ford got a grip on labor by doubling s workers' wag, longewould cars be builtsts in one place from bottom u the fordaid he wantedarts woulto make automobisrdid. come through the facry all alike, the mol t ford was a compcated product. whent comes om the pinactory.n it had about 500 parts. you could produce that part in large numbersery cheaply if those parts never changed. once you accept the principle
of a standard mol of automobile along with large runs ofhat automobile, then you can sit down anday, "i'm going to build my factory to produce parts over a over again." this is important fo machine tools and equipment. by 1914, ford completes plant.highla parkn with an additional investment of 3 million equipment and tools. the movingssembly line was the ultimate revolution. the lineeeded conveyor belts with overhead drive shafts movingaterials pasttationary workers. chains and orhead cranes moved the chassis. and r final assembly, ere were gravity sdes and . today it mightook chaotic, jerrybuil
but what was they discovered enormous increases ere were gravity sdes and . e prby ford manageup anwas d roughout the entire plant. r example, theime to produce the chassis-- the mainssembly line-- decreased from about 12 1/2 hours to 1 1/2 urs. the timeorngine assembly also decreased om about 8 1/2 hours down to approximately 2 urs. there were increases of 200% up to 800% in t productivity at the ford highland park plant. each worker had more equipment aunhim. though wages doubled, output increased more. in two years,mol t productin rose from 78,000 to 500,000, and the price came downto , then in 1916 to $360 a car.
here, ined, was more than t farmer's car-- the ford revolution uly had massive impactn. beyond the model t. what happens is,the foro veryapidly difse through deoit. beyond the model t. then they move from industry tondustry. in fact, ainatiol, movement. there's fordisimusn germany, everybody is trying to copyuni. fo's system of proction. t its meaning extended mightbeyond detroit it will not be forgotten. [honk] henry ford supplied mo than the model
wesked economic analystomic. richard gi to discuss factors that contribute wesked economic analystomic. to incased proctivity. we have arthe slogan,re's a for" there was a ominent ford inur past.henry rd gao on the factors that make foeconomic gwth. he showed us that imany iusiesbigger ca. heook advantage of the rapidly growingamerit that imany iusiesbigger ca. to exploit what economistsall economies of scale. as he increased oduction, his average costs per car fe, enabling him to lower the price and expand production. second expandingased e amount of machinery, plant, and equipmenteach la. this was an increase in the capital/labor ratio
it was exemplified this wby those cs,chai, and dris in the capital/labor ratio that his workers used. thirdly, he did everything in new ways. andesigned a different product.re intced a novemeodof procti- e assembly line. he was, according the gre, intan entrepreneurf procti- e asit has been said thatankee know-how made america gat. henry ford was one yankee who did know how. space. the race to reach beyond the limits of this planet capturedhe country's imagination in the 1960s. for decades americans have supported a mar investment in the space program anits accomplishments, like communications satellites.
how does thissatellitescame, far-out technologynts, come down to simple dollars and cents? early is century, tecommunicatio went where wires went. fiiraculously, across the street, teomity cit tecommunicatio went where wires went. then wire went under the ocean, and eupe was on our doorstep. by the late fifties, inational communications was busy. telstar, 1962. russian pre-eminence in space was more of a boost to telstar than was economic demand.wi, 100 transatlantic circuits were in use. connecd american business to all parts of the globe.ts leasing a circuit droppeto 1/7fn today, t private secto
is having its own satellites deployed, what can this do for productivity on earth?ems. througo coerencing top coorate management what can this do for productivity on earth?ems. througo coerencing can now get a round table with counterpas and customers in europe or asia. participants are in awe of theew opportunities. that the camera sees allis . sometimes it's safest to stick to old questions. how's your weather? it hasrightened up. how's your weather? american bankingis thoroughe withlobal technology, servicing american companies wherever ty may besupport ol is described by chase manttananker michaeurkowitz.
is described without the instantaneous availabili oinformatio that corration might ve had idle funds is described without the instantaneous availabili oinformatio sitting in its accou in fra, while athe same time is described without the instantaneous availabili oinformatio sitting with possiblyin fra, an overdraft with this technogy,ay subsn. in around the worldploy cits financiaresources technology comesown to earth when it afcts your own pocket. lsatellite communication has an impact on the availabilityof perso. just as i can usemyisa card etasinhe united states, i cause my visa card while aveling overseas, again to get cash. t those activiesequire
which alws the bankorhe mert and technology netwo to validate that thas a good card with sufficient credit linebehi. and technology netwo so in busiss to validate that thas a good card managementfficiey, in banking for both corporations and individuals, how important is the fieldng producviof communications to national economic growth? albert halprin of the fcc. of information transfer, is aital a cenal part whicis a largeand growing ro ofmajocompanieshave to to. day, virtually 50%growing ro of our gross national product is invold ctly or inrect with iormationse and transfer. advaes in communications chlogy provide huge oortunities for growth
inanagement oductivity. perhaps unwittingly, rhaps polically, american business was launched inanageminto a new era. by those early satellites rhapsof the sixties. futuristic space technology has bounded to earth to spur pr. it's notnly opened upites relying on communicaons.ustry.is inonsideringheenefits of isommucaons votion, weeep comingcross the phse w technogy-- satellite circuits,beoptics, digitadata, tes, megabytes. is this typical new techlogies?est alwaysnve wesked richard gill comment new technologies seem to be is this typical new techlogies?est alwaysnve anmporta factor in economic grow, not justin satellite tecology, is this typical new techlogies?est alwaysnve buquite generally.
one american economist who has studiethis question and then weighteem gwi tir relative importance. r e riod1929 tough 1969, he came the following conclusions. fie und that u. gnp had grown overhat 40ears at aaverage of 3.3%rate per year. about 1.3% of ts grow denison attributed t simple% expansionw of population and bor.ed n increase he aritenw that tuaity expanding lar force had to work with-- capiltuaity accumution. lar force these two items represen the growth of inputs-- and doot necessarily represent any new way
noticehe bigs. remaining item nearly half e growth rate, which represents increased output per unit ofnput. this is really where technocical ogress comes into play. re, we areealing wi new technologies, adnces in knowledge, e increased education and skills of the r foe. it's responsible for nearly out, and on a per capita sis, perhaps 75% or 80% of ourrowth. so t case of satellite communications is not really exceptional. ever sincehe sam engine, new technology has been systematically revolutionizing our lives. growth. in many parts of the world, growth means growth of population, growth in poverty, growthn e scarcity of resources.
today in america, we take economicrowth and oustandardf living for grante what iraw mateals run out? whatf pulationanpollutiog? in97rissued a report calledhe ce the limits to growth. what didhey predict, and could they be righ whaton population... if current growth rasconti, wod populationildouble whatonby t yea2000.. when our grandchildren are old, e polationwill have ubi consequentressure on land anodupies would be tremendous. widespad famine and malnutrition would be all-pervasive. widespad famine on industry...on the port concluded that if minerals and metals
weonsumed exhaustein few decades.lobal sue they were caed the club of rome cause they met there. the writers of the limits of growth came from m.i. jay forrester, a group consultant, summarized their conclusions the forces are like an oon. peel off one layer, and there's another limit. ultimaly, there will be a combination of forces that make it impossible for the high growth rate ofndustrializaon and e highrowtimpossible of population for to continueowth rate through the century. population. jay forrester recounts their dire prediction on forces which willalt popution gwth. those forces can be social perception that smaller familiesare ney
to long-term gh quali of life. or it will come about byhe sheer pressures of starvation or t social instabilities i thought there was a large scare element in it. that will precipitate an atomic wa while a professor at yale, hey wallicbegan to confront the doomsayers. some years ago, i guess 10 years ago, i think they'veections gradually come downople. because population growth has diminished and yieldeto the effect of higher standards of living. with higher standards of living and government persuasion, population growth can level off. disaster need not strike on pollution, political considerations are as important
as economic ones. anitpollution technologies are available, and the costs of cutting back emissions and cleaning up can be passed to consumers. inlves basic resources,mine. in the limits-to-growth thesis shorges were imminent, said the growth-busters. in the early seventies, eyot a boost for their cause. one of the striking things for the club of rome was, shorges were imminent, said the growth-busters. after the book came out, in the early seventies, eyot a boost for their cause. people said, "uh-huh, they're right.". then five or six years later, it jumped again, so that seemed to be pret good evidence now the price of oil is going down. people are not concerned about a basic shortage in the long-distant future.
the cartel is breaking apart. surely oil will run out in a few decades. not so, say oilmen. as long as there's a profit, new technology will keep supplies flowing. dr. ed david is president of exxon research corporation and a white house science adviser. with respect to discovering more, geologists today believe that you can use tomographic techniques, which are similar to what is used in the catscanner for diagnosing disease, for searching in the earth for new deposits of material. there are many new exploration tools such as satellites. the impending exhaustion of energy and mineral supplies had been predicted before-- in 1908, 1944, 1952. by now many minerals should be extinct. none is.
a major survival factor has been substitution between metals and between alternative forms of energy. such conservation will continue to prevent long-run shortages. besides, the earth's crust is 30 miles thick. we've barely scratched thsurf no wonder the doomsayers have been proved wrong. it seems unlikely that economic growth will stop because of too many people, too much pollution, too few resources. yet worldwide, there are vast differences between standards of living. in the next century, americans may accept lower growth rates as the rest of the world catches up. even though we've come to a slowdown, this is nothing fatal, not a collapse, as limits suggests. low growth rate is not as good as high,
but it's certainly better than stagnation. the real point of these models is that man can learn to control his own future. we do have an influence on our future. we can think about what we want it to be and push it in those directions that will result in a liveable world. public prophecy about economic conditions 50 or 100 years in the future is difficult. many experts believe that newechnologies and motivations of the marketplace are likely to overcome doom and gloom predictions. we asked analyst richard gill what our economic past may imply about the future. during her industrial revolution, great britain was running out of forests.
she responded by shifting to a coal technology. production increased many times over. that has been the story of modern economic growth. we see it today in metals like copper and energy sources like oil. this scenario isn't accidental. it is built into the way the market mechanism works. we have first a growing shortage of some resource. its price goes up, setting in motion a series of responses. first, it becomes profitable to try to find more-- we getdded supply. it becomes advisable to use as little of this resource as possible-- we get conservation. thirdly, it becomes desirable to focus our scientific and technological attention on developing new products and means of production that use other resources--
alternative technologies. historically, there is little doubt about the matter. responses have not only met the resource shortage problem, but have overshot the mark by a great margin, leading to increases in productive potentialities. with population growth and pollution, it is difficult to be so clear. in the matter of pollution, as i've noted in earlier programs, the price system can't solve the problem by itself. active preventative steps will have to be taken. even in the case of pollution, new technology is likely to help considerably. my personal conclusion-- we may eventually choose to abandon a growth-oriented society. i doubt we'll be forced to, certainly not in the years immediately ahead. the recipe for economic growth.
henry ford knew its ingredients. so do today's businessmen and entrepreneurs. what has been true for autos and communications will be true in the future as we strive for reasonable growth. there must be technology and investment in it, balanced by protection of the environment. then productivity can be safely increased to supply the demand of our people. for economics usa, i'm david schoumacher. captioning is made possible by the nenberg/cpb project captioning performed bytheg institute, inc. captions copyright 1986 educational film center